The Interplay of Artificial Intelligence and Digital Transformation in Shaping Corporate Strategy: Insights from Chinese Enterprises

Abstract

In the quest for a sustainable and innovative future, the integration of Artificial Intelligence (AI) with Digital Transformation has emerged as a pivotal strategy for businesses navigating the rapidly evolving digital economy. This research explores the dynamic relationship between AI adoption and corporate transformation, with a focus on publicly listed companies in China. Drawing on a multi-theoretical framework-comprising dynamic capabilities theory, the resource-based view, and the technological innovation systems perspective-the study employs robust panel econometric techniques, including Westerlund panel cointegration tests, dynamic panel OLS, and panel vector error correction models, to analyze 3,602 firm-year observations from 2010 to 2020. The results reveal significant long-term cointegration and a bidirectional causality between AI and DT, supporting a mutually reinforcing relationship. Moreover, technology-oriented businesses achieve greater levels of transformation. The findings demonstrate that AI integration significantly influences both current and future corporate transformation, underscoring a mutually beneficial relationship where AI and transformation drive each other. These insights are crucial for enterprises and policymakers aiming to harness the transformative potential of technological innovations.